Industry Turmoil Grows After UK Unveils Sharp Tax Hikes on Digital Gaming
The UK gambling sector is facing significant disruption following the government’s introduction of steep tax increases on online gaming, announced by Chancellor Rachel Reeves in her latest budget. This move heavily impacts digital gambling companies while leaving traditional betting shops unaffected.
Major Tax Hikes on Online Gambling Announced
Starting April next year, the tax rate on online casino games will more than double, rising from 21% to 40%, which is a far more severe hike than industry stakeholders had anticipated. By 2027, taxes on digital sports betting are also set to increase from 15% to 25%. In contrast, bets on horse racing and those made at physical locations will continue under the existing tax regime. The Treasury expects these measures to generate over one billion pounds annually by the decade’s end.
Industry Giants React to the New Tax Landscape
The announcement immediately unsettled financial markets. Evoke, owner of brands like William Hill and 888, saw its stock prices plummet to decade lows. The group anticipates an additional tax burden between 125 and 135 million pounds annually, prompting it to reconsider growth targets and plan spending cuts within the UK, with potential job losses looming as cost-saving measures intensify.
Similarly, Entain, parent company of Ladbrokes and Coral, expects to face losses nearing 100 million pounds next year, increasing to around 150 million pounds from 2027 onwards. The company forecasts a reduction in customer incentives such as promotional offers and warns that these tax hikes might drive bettors towards unregulated offshore gambling sites. While Entain aims to offset some losses through operational efficiencies, the financial impact remains substantial.
Flutter Signals Profit Decline and Industry Challenges
Flutter, which owns Paddy Power, Betfair, and Sky Bet, predicts a profit decline by hundreds of millions over the upcoming two years due to the tax increases. The company plans to trim marketing expenses and identify further cost savings but notes that the drastic tax rise will likely undermine the gambling sector’s competitiveness.
Partial Relief for Certain Gambling Sectors
Not all areas of the gambling industry are adversely affected. Bingo venues will no longer be burdened by a 10% tax, and the horse racing sector successfully avoided the proposed tax increases — a development welcomed by racing authorities. However, any financial difficulties faced by bookmakers could indirectly affect the racing industry.
Debate Over Social Impact and Industry Consequences
Proponents of the tax revisions argue that online slot machines and digital casino games pose higher social risks, justifying stronger financial regulations. Opponents from within the gambling industry contend that the tax hikes threaten jobs, weaken consumer protections, and create tougher conditions for smaller operators already facing tightening regulations across the market.
